MG106 Strategic Management
London School of Economics and Political Science
July 1, 2025
1997: Apple almost dies
2010: Most valuable tech company
What happened?
1️⃣ What have been Apple’s sources of competitive advantage?
2️⃣ Is the PC industry attractive? What are the dynamics?
3️⃣ How sustainable is Apple’s position in PCs? iPhones? iPads?
We’ll use everything we’ve learned: business models, industry analysis, and resources
What made Apple special?
From the 1980s to today, what resources and capabilities set Apple apart?
Let’s build our list together
But if Apple had all this… why did it nearly die?
Is the PC industry attractive?
Use our Five Forces lens
Verdict: Terrible Industry! 💀
| Force | Reality | Impact |
|---|---|---|
| Buyers | 50,000+ unit orders | Choose on price |
| Rivalry | Fragmented market | No pricing power |
| Entry | White-box = 30% share | Constant pressure |
| Substitutes | $300 alternatives | Eroding demand |
| Suppliers | Intel margins: 56% | They get the profits |
So how does Apple survive in this wasteland?
The 1990s Collapse:
Jobs’s Response:
Is this sustainable?
| Product | Position | Threats | Sustainability |
|---|---|---|---|
| iPod | 70% share | Music streaming, phones | Declining ⬇️ |
| iPhone | Rising star | Android, carriers | Strong… for now ✓ |
| iPad | Just launched | Too early to tell | Unknown ❓ |
What makes iPhone different from iPod?
| Resource | Valuable? | Rare? | Inimitable? |
|---|---|---|---|
| Premium brand | ✓ | ✓ | ✓ |
| Ecosystem lock-in | ✓ | ✓ | ✓ |
| Design capability | ✓ | ✓ | ? |
| Innovation culture | ✓ | ✓ | ✓ |
| User data/network | ✓ | ✓ | ✓ |
Key Insight: Products can be copied, ecosystems cannot
Mac Era: Great product in bad industry → Limited success
iPod Era: Great product + iTunes ecosystem → Temporary dominance
iPhone Era: Platform + App Store + Network effects → Sustainable advantage?
The lesson: Innovation must create new competitive space
Resources vs Features 🏗️
Beautiful products aren’t enough - need inimitable resources and systems
Industry Structure Matters 📊
Even Apple struggles in bad industries - must change the game, not just play better
Timing is Everything ⏰
Intel switch: Right move, perfect timing - each innovation built on the previous
Ecosystems > Products 🔗
Sustainable advantage comes from systems - lock-in through switching costs
Bear Case 🐻
Android will win (open vs closed)
Carriers will revolt
Innovation will slow without Jobs
Bull Case 🐂
Ecosystem is unbreakable
Brand premium sustainable
Innovation culture embedded
What’s your prediction?
Key Questions:
Hint: Think about local adaptation vs global strategy 🚗